The effect of nonideal conditions on the current flow in a MHD generator has been investigated by two‐dimensional analysis in terms of internal resistance, Hall voltage and uniformity of current distribution. In particular, the effects of (a) temperature profile along the Faraday direction in the plasma, (b) current bunching on cathode surfaces due to phenomena like arc spots, and (c) electrical leakage between adjacent electrodes due to finite resistance of the insulator segments are investigated. the results show that cold boundary layers near metallic electrode surfaces tend to relieve current concentration. the optimum resistivity of wedge‐shaped electrodes for obtaining uniform current distribution in the duct has been calculated for various temperature profiles. the results indicate that the internal resistance of a MHD generator strongly depends on the location and size of current bunched spots on cathodes. the fluctuations in the spot size and its location can lead to large fluctuations in power output. the present calculations reveal that the electrical performance of a MHD generator is not adversely affected by current leakage along insulator segments for small insulator conductivities.